Have a Tax Question? Ask a Tax Expert
Hello, my name is***** goal is to give you a complete & accurate answer. I am working on your request now & I will respond as soon as possible.
If you're asking what to do tax wise with the loss of the deposit, you would be entitled to a short-term capital loss.
Had the loss been the result of a default on an obligation in connection with a trade receivable, ie. for business conducted or services rendered) then the loss could be claimed as a business bad debt (ordinary deduction).
Since this was a cash deposit on equipment, it qualifies as a capital loss only.
Let me know if you have any follow-up questions.
Please remember to rate my response.
Thanks very much,